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Natural disasters and extreme weather affect businesses of all sizes in a big way. However, new research has found that those catastrophic events may affect small businesses the most.
According to the study, "Climate Change Preparedness and the Small Business Sector," one-third of small business owners said they have been personally affected by a storm or extreme weather. The consequences of being hit by a storm can be long-lasting, or even permanent, the researchers found. One-quarter of small and medium-size businesses hit by a storm do not reopen after a major storm.
Small businesses' vulnerability to storms results from a number of factors. One of the largest reasons for this vulnerability is that small business owners often fail to take the necessary preparation and planning steps. Just 43 percent of small businesses have a disaster-recovery plan, and 90 percent of the businesses that do have a plan spend less than one day a month maintaining and fine-tuning those plans.
"The United States business community is increasingly analyzing the risks, opportunities and financial implications of climate change and integrating them into long-term business plans," said Lea Reynolds, senior policy analyst and author of the report. "In recent years, the financial repercussions of weather variability and extremes have significantly impacted the U.S. economy by affecting both supply and demand for the products and services of almost every industry. For small businesses, the imperative for action is particularly acute."
Additionally, natural disasters have larger repercussions for small businesses because they often operate from a single location. Because those businesses also get a majority of their business from customers in the surrounding area, storms can hamstring a business that is in an area badly hit by the storm.
The researchers estimate that small businesses lose an average of $3,000 a day after closing due to a major storm.
The report also highlights how important it is for small business owners to take collective action to insulate the U.S. economy from the risks associated with climate change.
"More and more entrepreneurs are seeing real-life impacts to their businesses and their bottom lines from climate change and the extreme weather events it creates, and they want something done to help curb those effects," said Rhett Buttle, vice president of external affairs for Small Business Majority, a small business advocacy group that conducted the research along with the American Sustainable Business Council.
"They also see huge opportunities in the renewable-energy arena that will help boost their bottom lines, and believe government can create financial incentives that can help them take energy-efficiency measures to save money and create market opportunities for small firms," He added.